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2022 (6) TMI 1472 - ITAT MUMBAICommission income from accommodation entries - addition on substantive basis in hand of accommodation entry provider - addition in hands of assessee on protective basis - HELD THAT:- CIT(A) in the instant case has upheld the addition on the reasoning that the Income-tax department has not accepted the percentage estimated by the Tribunal in the case of Sh. Bhanwarlal Jain [2021 (8) TMI 1316 - ITAT MUMBAI], and further appeal has been preferred - CIT(A) has ignored that he, being a appellate authority, is required to follow the decision of the higher appellate forum irrespective whether the department has preferred appeal again the same, unless the decision of that appellate forum has been stayed by the higher appellate forum. CIT(A) cannot confirm an addition on protective basis. He is required to decided the issue either way and cannot proceed with keeping an addition on substantive in one case and protective in other case that too even after a finding of the higher appellate forum i.e. ITAT. We accordingly, reject this approach of the Ld CIT(A) and set aside his finding on the issue on dispute. Respectfully following the finding of the ITAT in the case of Sh. Bhanwarlal Jain the protective addition made in the case of the assessee in respect of commission income from accommodation entries is deleted. Decided in favour of assessee. Addition for low gross profit declared in trading activity - AO has made addition at the rate of 10.32% on the sales turnover to compensate the low gross profit rate of the assessee - CIT(A) upheld the gross profit rate addition made by AO - HELD THAT:- We find that tribunal in the case of Sh. Bhawarlal Jain (2021 (8) TMI 1316 - ITAT MUMBAI) has given a specific finding that 70 associate concerns of Sh. Bhanwarlal Jain were engaged in providing only accommodation entry and no real business was carried, which was recorded in their books of accounts. The assessee also being one of the concern out of those 70 concerns, the Ld. CIT(A) has correctly rejected the claim of the assessee that it was engaged in any trading activity. Once it is held, that assessee was not engaged in any trading activity, there is no justification for making any addition for low gross profit rate in such trading activity. The finding of the Ld. CIT(A)accordingly set aside. Decided in favour of assessee. Commission from accommodation entries enhanced by the CIT(A) - HELD THAT:- When it is evident that after the finding of the Tribunal in the case of Sh. Bhanwarlal Jian, no addition can be made on protective basis in the case of the assessee, there is no question of further enhancement of said commission income from accommodation entry and that too on substantive basis. The enhancing of such commission income from accommodation entries of bogus sales is without any reasoning and totally unjustified. We reject this action of Ld. CIT(A). CIT(A) has enhanced the commission income without providing any show cause notice to the assessee, which is in violation of the section 251(2) - In the impugned order there is no mention of any opportunity provided to the assessee by way of issue show cause notice, before making the addition and therefore this addition is unsustainable on the ground of violation provision of section 251(2) of the Act also.
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